Deconfusinator: How HP Laying Off 9,000 Staff Is Actually a Good Thing

HP's just sent shivers through the tech media by announcing 9,000 layoffs in its IT servicing business. Aren't we just clear of the recession, and didn't HP just fork over lots of cash for smartphone maker Palm? Let's try to de-confuse this news.

HP's layoffs are actually scheduled to take place over a couple of years, so it's not quite as harsh a move as it would appear right from the start. The job losses are also part of a bigger $1 billion "restructuring" package, so they're not necessarily due to a catastrophically failed business, which would be a bad sign indeed. But it's still a bold move to tell the world you'll be shedding some 9,000 staff from your enterprise division, particularly when your bigger company just handed over some $1.2 billion to buy an ailing company like Palm, and it's guaranteed to get the market tongues wagging.

It's actually a very good sign (though not necessarily so for the 9,000 souls who're for the chop) as it indicates HP is prepared to be agile to adapt its business to a rapidly changing market, and it's prepared to spend heavily—both in terms of acquisitions, and internal changes—to back up this thinking. In particular, the restructuring of the enterprise services division is necessary as the "next 10 years are going to be about who can automate the delivery of [these] services," according to HP's head of division Ann Livermore—and this early cost-cutting may give HP a "competitive advantage."

Nine thousand jobs is also only a tiny fraction of HP's 300,000-odd workforce, and the company's also noting that it'll be creating some 6,000 new posts in its sales force and global delivery centers. This means the net losses are just 1% of its staff, and the new hires are in areas that indicate HP will be aggressively positioning its products on the global market—which is absolutely vital in a changing era where U.S. tech products are even upsetting the traditionally market-leading Japanese tech giants.

All in all, this indicates that HP will be in a fabulous position in terms of forward-thinking to leverage Palm's technology and expertise into some of its upcoming products. And that can only be good news for the smartphone and tablet markets since strong competition is always good from a consumer standpoint.

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